How’s this for a bit of RAW market information?
Rupert Murdoch’s News Corp to buy out the 60 per cent of a satellite broadcaster it does not already own.
A price of 735p-750p a share is being mentioned by traders.
Reuters:
RTRS-BSKYB <BSY.L> UP 4.1 PCT ON TALK MURDOCH COULD TAKE THE SATELLITE BROADCASTER PRIVATE – TRADERS
And from the market:
RUMR BSY PRIVATE EQUITY COMING IN AT 735….
Aside from the fact that the figs were excellent, the stock’s been under rated for years and a Tory Govt would not force them to give content free, the Friday rumour is that Murdoch & News Corp will take it private…. …but Digger Murdoch might be a bit too old to get the funding (thats blown my chances of broking to him!)
And the shares are running in volume:
But is this anything more than a bit of Friday fun? Probably not. After all — why would Murdoch want to do this? And how would he fund the deal? And surely there are more exciting opportunities out there.
Updates to follow.
Update I:
From Dow Jones:
British Sky Broadcasting (BSY) +2.3% at 584 on market speculation that majority shareholder News Corp.
(NWS) is considering bidding for the UK pay-TV group, Numis Securities analyst Paul Richards says. If this is true, he suggests a price of around 750p-800p a share.
“I certainly think its plausible on the grounds that BSkyB has invested heavily and it’s just at the point where we think over the next couple of years profitability is going to rise very materially, and that hasn’t been reflected in the share price yet,” Richards says.
Assuming Rupert Murdoch does want full ownership then “in terms of timing, now is perfect.” Numis has a buy rating on BSkyB and 707p target price. News Corp. has roughly a 39% stake in BSkyB.
A BSkyB spokesman declined to comment on the speculation, while News Corp.’s London office wasn’t immediately available to comment. News Corp. owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.
Update II:
A note from UBS media analyst Polo Tang.
Rationale for buyout unclear
Although News Corp has the financial resources to undertake a deal (it has $8bn of cash with 2010 net debt/EBITDA of only 1.1x and leverage proforma for any deal would be <3x net debt/EBITDA), it is not clear why News Corp would want to do a deal now. News Corp already has effective control and it could have acquired BSY in the past at a lower share price. Separately, we believe News Corp is likely to be more focused on smaller deals. News Corp is covered by Michael Morris.
Buying an undervalued asset?
In our view, the only strategic rationale for News Corp making a move on BSkyB would be if they thought it was significantly undervalued and was about to enter a period of significant cash generation post significant investment in its broadband rollout. However, BSkyB may potentially face further investment in fibre.
Re-rating hinges on OFCOM review and fibre plans.
We believe BSkyB is seeing positive operating momentum following its HD box rollout and combined with hopes of a buyout, this is likely to provide support to the shares on the downside. However, further upside from here hinges on greater visibility on BSkyB’s plans on fibre rollout and a benign outcome of the OFCOM pay-TV market review at the end of March. BSkyB trades on 16.5x annualised 2010 EPS.